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April 10, 2012

News & Opinion: Reverse Innovation

By: 800-CEO-READ @ 1:19 PM – Filed under: Management & Workplace Culture

Following up my recent post on Jugaad Innovation, which detailed Western companies that looked at non-Western innovation as inspiration, today I'm reading Vijay Govindarajan and Chris Trimble's Reverse Innovation: Create Far From Home, Win Everywhere. What's interesting about this book, is the authors are calling companies to actually innovate from within non-rich countries, and then tweak that innovation to adapt to richer nations.

If this sounds over-ambitious, consider Gatorade, and example from the book, whose fundamental recipe began in Bangladesh to treat victims of cholera. When British medical journals reported on the success of the treatment, this information reached the University of Florida, with the idea being, "If such a treatment worked well for cholera patients, it would surely work for healthy football players."

Jeffrey Immelt, CEO of GE, is quoted in the book, supporting the concept of Reverse Innovation:
"If we don't come up with innovations in poor countries and take them global, new competitors from the developing world...will. That's a bracing prospect. GE has long had tremendous respect for traditional rivals like Siemens, Philips, and Rolls-Royce. But we know how to compete with them.
They will never destroy GE. The emerging giants, on the other hand, very well could."

Statements like this are not only a concern for GE people, but for the rest of us as well. The economic impact of outside companies destroying our own giants is something we all need to pay attention to. And this book helps put the situation into a clear perspective while offering a way to change.

Here's a final interesting statement from the authors themselves, that sums up why the concept needs to be taken seriously:
"One person with ten dollars to spend has a completely different set of wants and needs than ten people with one dollar to spend. That's why it's unrealistic to expect rich world products and services to have much of an impact in poor countries. Doing more business in high-growth hot spots - aka poor nations - requires much more than ramping up sales, distribution, and production. It requires innovation. Reverse innovation."

This is a fascinating book for anyone interested in how concepts of innovation need to change in order to succeed, and an even more important book for those who can actually take part on the level the authors advise.